Result showcases value of working with your co-operative

Farmlands Chief Executive, Peter Reidie discusses the factors that contributed to the 2018 Annual Result, along with the future direction of our co-operative.

The 2018 Annual Result clearly demonstrates how much we gain when you do more with your co-operative.

Our revenue has grown by 10.7 percent to $2.4 billion and we have prudently managed our cost base. The increased revenue has gone to our bottom line, leading to profit growth of 128 percent to $12.2 million.

Our performance has enabled us to re-instate a Bonus Rebate and we have rewarded the members of the co-operative who have supported the breadth of our business. By putting more of your farm inputs through Farmlands, your co-operative performs better and gets stronger. You, in turn, benefit through the strength that growth creates for us. It leads to better pricing, better innovation and stronger support from our suppliers. This year we will return half of our net profit before tax and rebate – $6.1 million – to our members, in a 50/50 split of cash and shares.

We are seeking to take our co-operative from being very good at doing what you needed 5 years ago, to being very good at providing what you will need 5 years from now. To do this, we need to better understand the external factors that impact your success, your behaviours on the land and the inputs you put into your businesses. Farmlands is very well placed to understand this, given the amount of transactions conducted directly within our store network, from our farm input business units and through our partnership model with leading suppliers and the Farmlands Card. We are investing to harness this knowledge.

What we refer to as Whole of Business is really whole of land inputs. The more we can provide you, the better outcomes we can get for you – the co-operative becomes stronger and the returns we provide become greater. It is in our interests to build these benefits and our ambition is to keep doing this, to create a strong, growing and prosperous co-operative that you own.

The challenge we have is that the way we have been doing things has not enabled this. That is why we have embarked on a major culture change programme, supported by significant system investment, new and consistent business processes and development of the capability and skills of our people. This will make us more successful going forward.

We call this programme Braveheart. We are well into the journey and we look forward to being able to provide you with solutions that help you and your fellow shareholders to be more successful. This will be achieved through our market leading knowledge and expertise, ideas and solutions built on best practice and the skills and capabilities of our people.

Braveheart is a culture programme that incorporates the latest technology into how we interact and deliver services to our shareholders. Technology is going to have a larger role to play in managing our land into the future than it has today and our investment in FarmIQ prepares us for that change. We see a platform by which all data collected on, around or for our land is consolidated through one platform to help you track and record and determine what are the best decisions to make for your land. FarmIQ is our first step in this journey.

One of the highlights of the past 12 months is the way our people have responded to the need for this change by embracing the tools, training and programmes we are providing them. I personally see our people growing in their roles and find this highly rewarding and stimulating. To see confidence and capability building across everything we do for our shareholders is a credit to a great team who are seeking to be more effective and better at their roles.

Our reporting shows we are more effective in keeping our people safe. Significant improvements can be seen in the reduced number of injuries we have on our sites. The growing number of safety interactions and near miss reporting allows us to identify areas of risk and do something about them to prevent an injury from occurring.

Having said that, we still have much to do in this area. Currently, Health and Safety is not the integral part of our culture that it needs to be to ensure our people leave their place of work in the same condition they arrived. We know we must – and have committed to – do more in order to make health, safety and wellness a way of life at Farmlands.

Our commitment to “doing more” has also brought us recognition from outside our co-operative, with three prestigious awards in 2018. We received the KPMG Customer Experience Excellence Award, the HR Institute of New Zealand Award for Talent Development and Management and the Cooperation Amongst Cooperatives from Cooperative Business New Zealand.

Regarding the KPMG Customer Experience Excellence Award, I really value the fact that it is a true acknowledgement of what our people in the stores, on the road, in our Contact Centre and those who transact with our shareholders do every day. The pillars of this award – Personalisation, Resolution, Integrity, Time and Effort, Expectations and Empathy – are what we do.

National surveys are usually taken up by a large representation of people from Auckland, Wellington and Christchurch, where we do not have significant (if any) operations. To get an award like this, with that “disadvantage”, is even more rewarding. Thank you to those of you who participated and articulated the Farmlands story.

The HR Institute of New Zealand Award for Talent Development and Management is once again a reflection of where we seek to take our cooperative. We need to understand the skills and capabilities of our people today and how we can build them to meet the needs of tomorrow. This award is validation of our approach.

Recognition is great but we need to continue to adapt to what our members expect of their co-operative. We are very mindful – and indeed see it as an advantage – that our customer is our shareholder. We please our customer, we please our shareholder and vice versa. To be aware of the needs of our customer, we have an “always on” survey that gives you the ability to provide instant feedback. This can be both good and bad, with our objective to build on the good and eliminate the bad. This survey is a very valuable tool that doubles as your voice and our pulse.

The challenge for the 12 months to come is to continue to build on our progress and to do that, we need to continue to show the tangible benefits that only Farmlands can provide. We have the breadth and depth of business to provide a complete solution to our shareholders. I encourage more shareholders to utilise their co-operative in more ways than they are accustomed to, as we continue to re-invent the Farmlands Co-operative Spirit, putting our shareholders’ future success at the centre of everything we do.